Analysis of entrepreneurial companyculture - a case study of the E-commerce company

This paper provides suggestions to change the corporate culture based on long term orientation of entrepreneurial companies, and also proposeslessons in building corporate culture for individuals who intend to start a business in the future.

1 Introduction

During the past decades, a large number of

theo-retical and empirical studieshaveemphasized the

important role of corporate culture in firm

perform-ance improvement as well as its sustainable

devel-opment However, in Vietnam, the corporate culture

was only clearly focused in several large enterprises,

with a long established history, such asViettel

Military Industry and Telecoms Group, Vietnam

Electricity Group, and Vietnam Dairy Products Joint

Stock Company Vinamilk, FPT Corporation,

etc.Small and medium enterprises and especially

entrepreneurial companiesstill pay inadequate

atten-tion to building, developing and managing corporate

culture To ensure the success of start-up businesses,

in addition to the professional, technological,

tech-nical, creative, financial capabilities, etc.corporate

culture is one of the most important elements which

should be developed in accordance with the

long-term strategy of the enterprises

Regarding the researchrelated to corporate

cul-ture in the world, the majority of scholars focused

on building tools and criteria to analyze, evaluate and classify corporate culture The outstanding stud-ies in this direction can include the

multidimension-al culturmultidimension-al research of Hofstede (1990), the three cultural classes of Schein (1999), the cultural model

of Deal and Kennedy (2001), Denison (2001) A number of other studies put great emphasis on the impact of culture on firm performance, including financial and non-financial results (Ojo, 2009; Shahzad et al., 2012) On the other hand, in Vietnam, the studies on corporate culture also addressedmany diverse aspects such as: lessons learned about culturedevelopment in developed countries (Do Minh Cuong, 2016), cultural transi-tion along with different development stages of the enterprise (Nguyen Hai Minh, 2015), the role of the leadership in building corporate culture (Tran Van Trang, 2017)

However, the number of studies analyzing the cultural characteristics of different groups of firm in line with Vietnam's economic is still limited In par-ticular, there is a lack of research on the culture of



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ANALYSIS OF ENTREPRENEURIAL

COMPANYCULTURE - A CASE STUDY

OF THE E-COMMERCE COMPANY

Le Thi Tu Anh Center for Business Administration Study VNU University of Economics and Business Email: lethituanh@vnu.edu.vn

Riceived: 28 th November 2018 Rivised: 27 th December 2018 Approved: 5 th January 2019

Corporate culture plays an important role in the success of businesses, especially with

entrepreneur-ial companies Withresults of case study analysis, thispaper partly clarifies basic characteristics of corporate culture of entrepreneurial companies and emphasizes the important role of corporate culture analysis and adjustment to match current and future development strategies This paper provides

sugges-tions to change the corporate culture based on long term orientation of entrepreneurial companies, and also

proposeslessons in building corporate culture for individuals who intend to start a business in the future.

Keywords: corporate culture, entrepreneurial company, adhocracy culture

entrepreneurial companies, especially in the context

of the Industrial Revolution 4.0, whichis creating

significant changes in the external business

environ-ment as well as the internal communication of firm

Therefore, this paper aims to answer a research

question: What are the cultural characteristics of

entrepreneurial companies in the current context of

Vietnam?

To clarify this issue, first of all, this paper

pro-vides an overview of a number of theories about

corporate culture, models of corporate culture

analysis and cultural characteristics of startup

busi-nesses Next, the culture of a startup company in the

field of e - commerce is analyzed by using the

Organizational Culture Assessment Instrument

(OCAI) developed by Cameron and Quinn (2011)

Based on the results from the selected startup

com-pany, this paper proposesseveral suggestions which

help managers in general, and business founders in

particular, in building and developing corporate

cul-ture in order to achieve their strategicmedium and

long-termgoals

2 Basic theoretical issues about corporate

culture

2.1 The importance of corporate culture

In the 80s of the 20th century, corporate culture

was more frequently mentioned in the studiesfrom

the management approach At present, there is still

an inconsistencyin defining corporate culture due to

the diversity of approaches as well as the scope of

research and the application of this concept In a

simple way, corporate culture is usuallyunderstood

as the waythat the enterprise do everything to

achieve success (Schneider, 1994) Corporate

cul-ture includes values, beliefs, and perceptions that

all members of the organization agree with This

understanding emphasizes the consistency in

cor-porate culture and the impact of culture on each

employee's actions

Numerous studies in the world and in Vietnam

insisted on the important impacts of culture on the

performance of enterprises Some studies showed

the positive impact of culture on improving the

operational performance (Abraham and Nahm,

2004; Ojo, 2009; Shahzad et al, 2012) Other

authors investigated the impact from some specific

aspects of culture, such as leadership effectiveness,

employee commitment, to financial performance and employee satisfaction (Harris, 2000; Chen, 2004) The common point in the results of these studies is the affirmation of the indispensable role of corporate culture in organizations in different sec-tors, industries and stages of business development

2.2 Models of corporate culture analysis

Corporate culture is approached from many dif-ferent points of view Today's theoretical studies of corporate culture could be categorized into three main groups: Integration, Differentiation and Fragmentation The differentiation and fragmenta-tion approaches are primarily concerned with the differences and complexities in the culture of each individual, small group or group; and emphasize interactions and conflicts between cultures Meanwhile, researches based in integration approach indicated that "all cultural aspects are con-sistent and complementary" (Martin, 2002) In an organization, there is always the cultural unity This

is also an approach used primarily in management-oriented studies, which helps decision makers and business owners to take necessary measures to effectively build and develop corporate culture

Thispaper focused on comparing four cultural models based on an integration perspective, includ-ing: models of Harrison (1987), Deal & Kennedy (2000), Schneider (1994), Cameron and Quinn (2011) The advantage of these models is that it allowsfirms to change their corporate culture at a certain time; to determine the type of culture that they aim to build, therefore they could make deci-sion ondeveloping appropriate culture The compar-isons of these four models are shown in Table 1

The culture model of Harrison (1987) showed four organizational ideologies including: task orien-tation, person orienorien-tation, power orientation and role orientation The difference between these four ideologies is assessed based on the degree of con-centration of power and the formalization of those powers through specific texts and rules In particu-lar, family - owned companies or newly established businesses are often power - oriented Specifically,

in power - oriented businesses, leaderstry to main-tain absolute control over their subordinates Employee compliance is always more appreciated than their performance In the meantime, a role

ori-entation organization is directed towards a clear

order Competition and conflict are resolvedthrough

agreements, rules and procedures, etc

The task orientation organizations consider

achieving the goal as the highest destination The

structure, functions and activities of the

organiza-tion are carried out to fulfill the tasks set According

to Harrison (1987), task - oriented culture is often

seen in factories, companies having just started

their businesses, or operating in high - risk sectors,

research organizations or in military organizations

Person orientation organizations aim to meet the

needs of each member being involved in the

organ-ization Each person's authority will be assigned

based on competence The culture of person

-ori-ented companies is characterized by trust between

individuals, and between individuals and

organiza-tions Person orientation is linkedto consulting

companies or small groups of professionals

work-ing in the research and development department of

the enterprise

The culture model of Deal and Kennedy (2000)

is developed based on the fact that corporate culture

is shaped by external factors such as competitive

environment, competitors, specific products, etc

Based on two main groups of factors: the level of

risk and the response to changes of business

envi-ronment, Deal and Kennedy (2000)

classifiedcorpo-rate culture in four groups: tough - guy culture,

process culture, work hard/play hard culture and bet

- your - company culture, etc In particular, tough -

guy culture, with the promotion of individualism, is

often linked to venture capital firms, construction,

cosmetics and publishing Individuals working in

such organizations are required a tough attitude to

face fierce competition within the enterprise

The model of Schneider (1994) divided

corpo-rate culture into four main groups: cultivation,

col-laboration, control and competence Specifically,

cultivation culture and collaboration culture

pro-mote the cohesion between individuals in the

organization, which is built on mutual trust

(culti-vation) or interdependence to achieve

common-goals (collaboration) In contrast, control culture

and competence culture emphasize objectivity

Control culture values the decisions being

objec-tively made based on analysis and examination of

external factors Meanwhile, the basic value that cultural competence is interested in is knowledge and information The success of an organization of competence culture is based on the need for each individual to demonstrate his or her ability, or even superior ability compared to others

The model of Cameron and Quinn (2011) con-sidered corporate culture in four core values: flexi-bility, staflexi-bility, internal focus and external focus A special feature in the model of Cameron and Quinn (2011) is that along with the development process of the firms, corporate culture is not fixed but tends to move through a predictable model about the changes of firm, which starts from adhocracy cul-ture to clan culcul-ture, moving to hierarchy culcul-ture and then market culture Although this trend is summa-rized through a large number of empirical

research-es in the world, it doresearch-es not mean that this is a mandatory trend and is suitable for all businesses

Adhocracy culture emphasizes an open and free workspace that allows employees to create and pro-mote their new ideas, thereby providing customers with special products and servicesthat have not appeared in the market Adhocracy culture is often associated with companies in the field of informa-tion technology, electronics, etc with high - risk investment projects Meanwhile, hierarchy culture emphasizes principles and regulations that help to maintain order in the organization The leader is the one who controls and ensures that the output prod-ucts must meet certain standards

Besides, creative businesses requiring high inter-action among members often build clan culture which is characterized by friendly atmosphere between employees and superiors The relationship between individuals in the organization is like that

of a family The rope that binds members is loyalty, striving for the common goal In contrast, market culture creates a healthy competitive environment for individuals to strive to achieve their goals and to show their superiority Companies linked with this culture focus more on the ultimate result than on used process or methods

The four models of these authors described dif-ferent aspects of culture Harrison's model focused

on how to make decisions (centralization and for-malization) Deal and Kennedy focused on

deter-

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mining what type of decision should be made and

who has the right to make a decision Schneider

focused on how to think in the decision - making

process (decision makers direct their thinking to

individuals or organizations, at the present or

future) Cameron and Quinn emphasized the values

that the organization wants and the progress of

cul-ture since the start of the business until it is clearly

shaped in the market In fact, in many cases, the

cul-ture of companies shows more than one aspect that

models suggested, but it focus more on a specific

orientation

In this paper, the culture model of Cameron and Quinn (2011) is selected for cultural analysis of entrepreneurial companies for the following rea-sons: (1) organizational culture assessment instru-ment OCAI is held by Cameron and Quinn devel-oped from a model that has been widely applied in the world, with high reliability; (2) analysis results allow to find the direction of cultural movement over time, from which managers can find solutions

to change the culture towards a certain direction

However, since the model of Cameron and Quinn (2011) limits corporate culture in four

dimen-sions, the cultural assessment through the model will not be able to express the inherent complexity of culture Therefore, in addition to sur-veying with OCAI's culture assessment instrument, this paper uses in - depth inter-views with a number of indi-viduals who have important roles in the organization to explore others aspects of cul-ture whichhave not been shown in the questionnaire

2.3 Characteristics of entrepreneurial companies

The characteristics of startups are closely related to shaping, developing and changing corporate culture According to Blank (2010), the difference between a startup and a business that has formed and developed over a long period of time is mainly related to goals, per-formance indicators and especially culture and employees Building and developing culture is essen-tial in determining the suc-cess of a startup because cul-ture is one of the characteris-tics to keep talented employ-ees ready to participate in the

Table 1: Comparison of four typical culture models

(Source: Edited by author based on research of Maximini (2015))

Harrison (1987)

Deal &

Kennedy (2000)

Schneider (1994) Cameron &

Quinn (2011)

Name of

cultural groups

Power orientation Task orientation Role orientation Person orientation

Bet - your - company Work hard/play hard Process Tough-guy

Cultivation Collaboration Control Competence

Adhocracy Clan Hierarchy Market

Primary focus Process

conduction and decision making

Kinds of decisions

General way of thinking in the decision making process

Values held dear

by organization

X-axis High/low

centralization

High/low risk

People/company orientation

Internal/ external focus

Y-axis High/low

formalization

Fast/slow feedback

Actuality/possibility orientation

Flexibility and discretion/Stability and control Questionnaire’s

validity

Statistically validated by empirical studies

Statistically validated

by empirical studies

Unknow Statistically

validated by empirical studies

Application

level at the

present time

Less used Still

continue to

be used

Still continue to be used

Still continue to be used

Main factor

determining

corporate

culture

Individuals of firm

External factors

Internal and external factors

Internal and external factors

organization Corporate culture is originated from

business founders and is at the heart of the

manage-ment process in entrepreneurial companies

Based on research on entrepreneurialcompanies

of Carlandet al (2007), the most

importantcharac-teristic of startup is the rapid growth of customers

and revenue over time This growth needs to be

basedon innovation, fully exploiting new

technolo-gies, new ideas that have never been on the market

Thereby these companies could provide new

prod-ucts, new production methods, explore a new

mar-ket or even change the organization of an entire

field Some basic characteristics of start-up

busi-nesses that directly affect corporate culture can be

summarized as follows:

- Risks: Entrepreneurial companies affirm their

position in the market through constant innovation,

creativity, breakthrough products, testing of

prod-ucts and services that have not yet appeared on the

market This requires risk, daring to cope with risks

and challenges when launching a product that has

not been clearly verified about the ability to attract

users and increase revenue

- Flexibility: Entrepreneurial companies

con-stantly change in their products, processes as well as

organizational structures Flexibility to deal with

changes in the market and within the organization

allows companies to gradually find the most

appro-priate form in order to move into a stable

develop-ment stage

- Creativity: Entrepreneurial companies create a

difference with other businesses in innovation,

cre-ativity, and application of modern technologies to

create a leap in sales and user volume

3 Research method

The author uses case-study research method

through surveying employees at a startup in

e-com-merce in Hanoi This company was established in

2015 and has achieved certain successes in business,

continuously received investments from large

enter-prises and investment funds such as: Vietnam

Silicon Valley, Hajime Hotta (Angel investor),

Design One Japan, Golden Gate Venture and

RekaNext Venture, etc With the results achieved

after three years of development, the enterprise has

continued to affirm its position in the race of

tech-nology companies in the field e-commerce The

results of culture analysis of this company provide several lessons for other small and medium enter-prises in Vietnam and for individuals who intend to start business in the future

The primary data collection process uses two methods: in - depth interviews and questionnaire survey First of all, the author contacted in - depth interviews with HR Director and Director of Product Research and Development, who are two

of the founders of the company to learn about some basic elements of corporate culture The interview questions were established based on Schein's (2009) research, which consists of three main question groups related to: survival issues outside the company (tasks, strategies, goals, structure, system, etc.); internal issues (communi-cation, teamwork, power, relationships, rewards, etc.); and some deeper assumptions about corpo-rate culture (the nature of relationships inside the company, hypothetical management, how the company deals with unclear or uncontrollable issues, etc.) The two directors were then asked to answer a questionnaire consisting of 24 questions according to the Organizational Cultural Assessment Instrument (OCAI) of Cameron and Quinn (2011) The information gathered from the founders of the company helps to clarify the man-agement orientation as well as their desire to develop corporate culture

Next, an online survey was created through the Google Docs application, which included 24 ques-tions similar to the questionnaire used with two directors in step one The link to the online question-naire is sent via personal email to all employees of the company Using an online survey tool allows anonymous respondents to ensure objectivity of sur-vey results The total number of emails sent is 183 The number of survey results collected from Google Docs is 95

The results of the questionnaire analysis are summarized and compared with the results obtained from the founders of the company in step one to find out the cultural characteristics of this company and the difference between the level of culture assess-ment of employees compared to the culture develop-ment orientation of the company



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4 Analysis results on cultural characteristics

of entrepreneurial company

4.1 Descriptive statistics of research sample

The collected sample objects are employees

working full - time at the head office and the

repre-sentative office of the entrepreneurial company The

basic information of respondents to the survey

ques-tionnaires is presented in Table 2 In general, the

respondents are young people under 30 years old

(accounting for more than 75% of the total sample)

and have a high level of education, mostly bachelor

(more than 87%)

4.2 Cultural characteristics of entrepreneurial

company

The results of cultural analysis of the startup

enterprise are presented in Table 3 Based on these

results, it can be seen that the current culture of the

company is Hierarchy (D = 37.2) and Market (C =

31.1) This shows that employees in the company

feel that the current working environment is very

serious and organized They always strive to

main-tain achievement and improve operational

efficien-cy They also understand that the business market is

aiming for fierce competition and customers are the

foundation for success The core value of current

corporate culture is stability This result partly

reflects the current development stage in the market

of the company After three years of establishment

and development, the company has built and

affirmed its brand as well as maintained its own

identity in e-commerce products Within the

compa-ny, the control process system is also gradually improving, allowing to strictly control the work effi-ciency of each individual

Meanwhile, the results of cultural ori-entation analysis show that the founders want to build market culture (D = 29.1) and adhocracy culture (B = 28.3) Specifically, market is expected to become the

mainstream culture of company in the future With the current competitive advantage, which is based on an outstand-ing product of e - commerce platform between customers and customers (C2C), founders

aim to maintain theleading position in the domestic market and attract more regional and global investors On the other hand, adhocracy culture is also the path chosen to develop

by the company founders (B = 28.3) This ratingcould be explained by usingthe results of in - depth inter-views with two founders Specifically, adhocracy and market culture are somewhat expressed in the core values

of company as "Quick" and "Creative" The cur-rent success of company relies heavily on the ability

to capture and respond quickly to market needs and offer superior and innovative products compared to competitors

The culture analysis results of the two groups of respondents and surveys are shown in Figure 1 The comparison of the founders' desires with current culture assessment shows certain differences To the founders, the biggest change which should be made

Table 2: Characteristics of respondents

Age

Qualification

High school

Table 3: Results on corporate culture analysis

Current culture

Orientation

of founders Deviation

in the future is to strengthen more adhocracy

cul-ture, with the gap between the founder's and the

cur-rent culture's assessment of 14.1 In contrast, the

hierarchy culture is oriented to decrease with the

difference of 13.7 The difference between clanand

market culture assessmentis not relatively

signifi-cant However, the rise of adhocracy culture does

not mean that this culture is absolutely dominant

The dominant culturesoriented by the founders is

market and adhocracy culture, but the level of these

two cultures still has a certain balance against clan

and hierarchy culture

4.3 Solutions proposedforcorporate culture

changes

Based on the results of in-depth interviews, the

results of surveys using OCAI tools and the theory

of cultural groups, this paper proposes a number of

solutions to achieve positive changes in the culture,

which helps to achieve the business goals and

improve performance of firm

According to the founders' orientation, the

cor-porate culture needs to change in the direction of

increasing adhocracy culture and reducing hierarchy

culture Several solutions should be implemented,

including:

- Adjusting the working space and the mode of

communication between individuals in the

organiza-tion in a more open way: Currently, due to the

geo-graphical distance between the main office and the

representative office of the company, the grantees

changes, discussions, meetings, etc are usually

done online or via email This partly limits the friendly communication between employees in dif-ferent working areas The company could create a dynamic, free and close environment through encouraging individuals to share information more often through informal discussions

- Changing the ways of interaction between founders, managers and employees in the company:

the founders needs to act as a pioneer who give a long-term vision, suggest creative ideas to connect their employees, instead of acting as results con-troller

- Adjusting the performance evaluation mecha-nism to encourage innovation activities: Regularly evaluating employees' innovation activities in prod-ucts, processes, etc.will contribute to promoting adhocracy culture In addition to evaluating the final results, the managers also need to set criteria to assess the process of innovation to timely encourage and support creative ideas

- Maintaining the spirit of healthy competition among employees: Market culture, which has not significant difference between the current assess-ment and the desire of the founders, still needs to be maintained through setting specific goals related to the work of departments or individuals and a clear reward mechanism Because maintaining internal competition is determined by the founders as a lever

to help achievingthe common goals, ensuring that each individual's goals are united and aligned with the goals of the company

5 Conclusions

Corporate culture plays an important role not only with large-scale enterprises developed for a long period but also with entrepreneurial companies

in improving both competitiveness and economic performance This paperreviews a number of culture models that were widely used in the world and able

to be applied to the context of entrepreneurial com-panies in Vietnam When the appropriatecorporate culture is determined, these models also allowto work out specific solutions to adjust and change cor-porate culture in line with the long - term orientation

of firm Based on the results of case-study analysis

of an entrepreneurial company in the field of e-com-merce, this paper partly clarifies some basic charac-teristics of the culture of entrepreneurial companies



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Figure 1: Current culture and future orientation

of the company

Current Future

and emphasizes the important role of analyzing and

adjusting corporate culture to match the current and

future development strategy Limitations of

thispa-per relate to the scope of survey investigations that

are limited to a typical enterprise, so the results of

the analysis have not yet generalized characteristics

of startups in other fields Future studies may

over-come this limitation by expanding the scope of the

investigation to a group of enterprises operating in

the same field or combining the survey of

question-naires with group discussions for comparison

between different business groups

References:

1 Harrison, R (1972) Understanding your

orga-nization’s character Harvard Business Review,

May/June, 119-128

2 Cameron Quinn (2011) Diagnosing and

changing organizational culture: Based on the

com-peting values framework Reading, MA: Addison -

Wesley

3 Schneider, W (1994) The Reengineering

Alternative: A Plan for Making Your Current

Culture Work Burr Ridge, IL: Irwin Professional

Publishing

4 Maximini, D (2015) The Scrum culture:

Introducing Agile Methods in Organizations

Springer, Berlin

5 Deal T.E and Kennedy A.A (2000) Corporate

Cultures, Reading, MA: Addison-Wesley

6 Carland, J.W., Hoy, F., Boulton, W.R

&Carland, J.A.C (2007) Differentiating

Entrepreneurs from Small Business Owners: A Conceptualization, Entrepreneurship, 73 - 81

Summary

Văn hóa doanh nghiệp có vai trò quan trọng trong sự thành công của doanh nghiệp, đặc biệt là với các doanh nghiệp khởi nghiệp… Với kết quả phân tích điển hình, bài viết phần nào làm rõ một số đặc trưng cơ bản trong văn hóa của các doanh nghiệp khởi nghiệp và nhấn mạnh vai trò quan trọng của việc phân tích và điều chỉnh văn hóa để phù hợp với chiến lược phát triển hiện tại và trong tương lai.Bài viết cung cấp một số gợi ýđể thay đổi văn hóa theo định hướng dài hạn của doanh nghiệp khởi nghiệp, đồng thời cũng chỉ ra bài học trong việc xây dựng văn hóa doanh nghiệp cho các cá nhân có ý định khởi sự kinh doanh trong tương lai

LE THI TU ANH

1 Personal Profile:

- Name: Le Thi Tu Anh

- Date of birth: 20th September 1992

- Title: Master of Economics (M.Econ)

- Workplace: Center of Business Administration Studies - University of Economics and Business - VNU

- Position: Researcher

2 Major research directions:

- Human resource management towards sustainable development

- Corporate culture, business ethics, corporate social responsibility

- Production management, supply chain quality management

- Service quality management

3 Publications the author has published his works:

- Journal of Trade Science